Goldman Sachs(US:GS) Goldman Sachs·2025-04-21 05:09Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report discusses the negative impact of US tariffs on emerging market (EM) economies, particularly in Asia, leading to downgraded growth forecasts across various EMs [3][44] - It identifies China, Malaysia, Mexico, Hungary, and Vietnam as the most exposed to tariff turmoil, while Russia, Ukraine, Turkey, Argentina, and Poland are likely to be less affected [6][36] - The report anticipates more monetary easing across EMs due to declining inflation and weak growth, with central banks expected to implement front-loaded easing policies [6][47] Summary by Sections EM Macro Navigator Overview - The publication provides an overview of themes, market trends, and events relevant to EM investors, assessing the impact of US tariffs on EM economies [3][9] - It includes country-by-country forecasts, with significant downgrades noted for smaller export-oriented economies in Asia [3][44] Impact of US Tariffs - The US announced significant tariff increases, including a 10% baseline increase and a 125% tariff on Chinese imports, leading to a 15 percentage point increase in the effective US tariff rate [8][9] - The report explores five channels through which tariffs affect EM economies: direct trade effects, trade diversion effects, uncertainty effects, financial conditions/liquidity, and commodity prices [10][22] Country-Specific Forecasts - In China, growth forecasts have been lowered to 4.0% in 2025 and 3.5% in 2026, with expectations of policy easing mitigating some impacts [6][46] - Mexico's growth forecast has been revised down from 0.0% to -0.5% in 2025, while significant cuts are noted for Czechia and Hungary due to their reliance on auto production [6][46] Financial Conditions and Monetary Policy - The report indicates a tightening of financial conditions in developed markets, while some EMs have experienced easing due to exchange rate depreciation [25][28] - EM central banks are expected to implement more aggressive rate cuts, with specific forecasts for countries like India, Mexico, and Chile [51][62] Commodity Price Effects - Oil prices have decreased by 15% to $64 per barrel since the tariff announcement, with further declines expected, impacting both oil-exporting and oil-importing countries differently [31][34] - The report highlights that lower commodity prices will have significant negative consequences for oil-exporting countries while benefiting oil-importers [31][34]